When it comes to figuring out your finances, it’s easy to get led astray. There are so many pervasive myths about money, debt, investing and more. How should you even begin?
Darla Pellersels, a long time financial advisor and president of Prosperity Financial Associates in Henderson, Nevada, says it’s important to educate yourself about finances and start taking control of your money right now.
“I would encourage everyone to read, reach out to an investment professional, take a class, and gather facts on investing, finances, budgeting, life insurance, and debt reductions strategies,” says Pellersels.
To help you manage your money, Pellersels debunks 8 common money myths that you may find yourself believing. Take a look.
MYTH #1: My student loan is deferred and not gaining interest.
Oftentimes this isn’t true. Check out the conditions of your loan and read every bit of paperwork. In many cases, the specifics of your loan are stated quite clearly on the invoice or statement.
MYTH #2: I don’t need life insurance because I will be dead, so why should I care?
This is a common myth that many people buy into. Although you may not need the insurance money after you pass away, a lack of insurance can leave your grieving spouse in a terrible financial bind. And, in some states, your loved ones can inherit your debt – leaving them in dire financial straits. You have insurance on your cell phone…why not your life! There are some insurance products that can also pay you for chronic, critical and even terminal illnesses. It’s worth your time to research and buy the best life insurance policy for you.
MYTH #3: You have to be rich to invest.
This is flat-out not true. In fact, you don’t even have to be wealthy to hire a financial advisor. There are plenty of advisers out there that will help you invest with a small minimal investment and low to no fees. Pellersels says she has many clients that can only invest a small amount monthly or annually. If you start early, a small amount can change your retirement picture down the road.
MYTH #4: If a financial advisor controls my money, I don’t need to know how to invest. That’s why there are professionals.
Here’s the bottom line: it’s your money and your retirement! You need to know where your money is invested at all times. You should always ask about about your investments, especially when weighing risk against benefits and volatility.
MYTH #5: I have to wait until I am 65 to retire.
Many folks believe that there’s a mandatory retirement age but this just isn’t true. You can retire at any age or time you want. Regardless of when you plan to retire, it’s important that you work toward getting out of debt, invest as much as you can into a retirement account, and save money to prepare to live out the rest of your years.
MYTH #6: It’s too late for me to gain control of my finances. I’m in my 50’s or 60’s.
If you are still breathing and working, you can get started! You can pay off your recurring monthly debt, save up for emergencies, and sock money away for retirement. With dedication, a strong monthly budget, and a will to make it happen, you’ll hopefully be able to plan for a comfortable retirement.
MYTH #7: I will always have a car payment or house payment.
Believe it or not, there is nothing that says these things are forever. You don’t have to have a car payment or house payment. There are many people out there that pay cash for slightly used cars. There are even people that have paid off their home mortgage early. To pay off your car or home loan sooner, you may want to consider earmarking extra money toward your monthly payments. This will not only help you hit your goals earlier, but you’ll also end up paying less interest.
MYTH #8: Credit Cards are great for emergencies.
Wrong. Cash is great for emergencies! If you use a credit card to cover an emergency and it lasts longer than anticipated, you have only dug yourself into a deeper debt hole. Losing a job, medical issues, or even accidents can set you back significantly. This is what an emergency fund is for.
Seek Out Expert Advice to Discern Fact From Fiction
Speaking with a good financial advisor can help set you up for financial success. The key is to find someone who is ready and willing to answer all your questions in a way that helps you understand and take control of your money. Are you ready to bust some money myths?